A cryptocurrency trading screen. This image is not directly related to the article. [123RF]
A cryptocurrency trading screen. This image is not directly related to the article. [123RF]

A group that launched a so-called "rug pull" scheme — issuing a meme coin on a decentralized exchange, spreading false information to drive up the price, then dumping their holdings — has been sentenced to prison in a first-instance ruling.

Seoul Southern District Court's Criminal Division 11 (presiding judge Jang Chan) sentenced Park, the ringleader, to four years in prison Thursday on charges of violating the Act on Protection of Virtual Asset Users. Lee, who managed the group's social media accounts, received two years and six months, while a second accomplice, also surnamed Lee, was given three years suspended for five years. The court also ordered the forfeiture and recovery of virtual assets and other proceeds obtained through the crimes.

The court called the scheme "a serious crime that gravely undermines the trust of ordinary investors in the virtual asset market," finding that the defendants had "inflicted unforeseeable losses on an unspecified number of investors who traded virtual assets based on their artificial manipulation."

It added that "innocent investors who bought in later suffered great losses," and emphasized that "a large number of victims harmed by the defendants' crimes are petitioning for severe punishment."

In determining sentences, the court cited the social media manager Lee's destruction of physical evidence — including the accounts used for promotion — as an aggravating factor, and noted that Park had refused to cooperate with investigators and had fled. For the accomplice Lee who received a suspended sentence, the court took into account his active cooperation with the investigation, which contributed to establishing the facts of the case, as well as the fact that he was 19 at the time of the offenses.

The case marks the first prosecution under the "fraudulent trading" provisions of the Virtual Asset User Protection Act, which took effect in 2024. According to the court, Park and the others conspired to issue a meme coin, pre-purchased holdings, then used official social media accounts to post announcements and promotional content touting positive developments that had little chance of materializing.

The group lured ordinary investors into buying the coin, and once the price had surged sharply, executed a rug pull by selling off all of their pre-acquired holdings at once.

The coin's price soared more than 1,001-fold within roughly 26 hours of trading beginning, drawing about 6,000 investors. As buying pressure mounted and the price spiked, the group dumped their holdings — turning an initial outlay of about 10 million won ($6,750) into roughly 400 million won in illicit profit. Prosecutors have so far identified 256 victims, with total damages estimated at around 900 million won.


newday@heraldcorp.com